Guide to crypto staking taxes: What you owe and how to file

Staking cryptocurrency can be a great way to generate steady rewards without selling your assets, but the earnings do have tax implications. The IRS expects you to report staking rewards once you have dominion and control over the rewards, and this may affect both your income and capital gains taxes.

This guide explains crypto staking taxes in detail – you’ll learn how to report them correctly on your tax return and what to do later if you dispose of the rewards.

What’s crypto staking?

Crypto staking is when investors commit their digital assets to support and secure a blockchain network. In exchange for this commitment, the protocol provides rewards, which are usually paid out in additional tokens of the same cryptocurrency.

From a tax perspective, the IRS treats these rewards as income. You’ll report the fair market value (FMV) at receipt as ordinary income, and that same value becomes your cost basis for the tokens. If you later sell, swap, or spend the rewards, you may owe capital gains tax or realize a capital loss based on any change in value.

What crypto staking activities are taxable events?

Moving assets from your crypto wallet to a staking platform isn’t a taxable event, since you’re just changing the location without affecting the assets’ ownership or value.

But after that, the following are considered taxable events:

• Receiving staking rewards: Once the rewards are in your account and you have the ability to sell, transfer, or otherwise use them, you’ve received taxable income.
• Selling, swapping, or spending staking rewards: If you later dispose of your staking rewards, you trigger a second taxable event. At that point, you’ll calculate a capital gain or loss based on the difference between the crypto’s value when you received it and when you disposed of it.

Do you have to pay taxes on crypto staking rewards?

In the United States, you are required to pay taxes on staking rewards. The IRS has issued guidance about these earnings, and Revenue Ruling 2023-14 specifically addresses how taxpayers must report rewards from proof-of-stake blockchains.

These guidelines make it clear that you owe staking rewards taxes the moment you have the legal and technical right to use the tokens (called “dominion and control”). If your rewards are locked in a protocol and you can’t move them, they’re not taxable until they’re unlocked and accessible in your wallet. Once you have control, you must include the rewards’ FMV in your gross income for the tax year.

For example, let's say you staked tokens in July 2025. The rewards accumulated in a smart contract, but remained locked until January 2026. Because you didn't have dominion and control over the crypto in 2025, you won’t report this income until you file your 2026 tax return. You’ll use the FMV of the tokens on the day they were unlocked in January to determine your income.

How are staking rewards taxed?

Staking rewards involve two possible layers of taxation, depending on what you do after receiving them. First, the IRS taxes staking rewards as ordinary income, with the taxable amount equaling the FMV at the time you gain dominion and control.

If you later sell, swap, or spend those rewards, you may owe capital gains tax. You’ll calculate the gain or loss by comparing the asset’s value at disposal to its original value (the cost basis) when you received it as income.

Are staking rewards taxed twice?

Staking rewards are not taxed twice on the same value. The first tax event occurs when you receive the rewards and recognize ordinary income, and that taxable amount becomes your cost basis.

The second tax only applies to any change in value after receipt. If the price increases before you dispose of the asset, you’ll report a capital gain, and if the price decreases you may report a capital loss.

For example, if your $1,000 worth of rewarded tokens grows in value to $1,500 before you sell them, you’ll owe income tax on the first $1,000 and capital gains tax on the remaining $500. This system ensures that you aren’t taxed twice on the same value – only on the wealth you created at each stage of the investment.

How do you report crypto staking rewards on your tax return?

Proper IRS reporting requires you to keep meticulous records throughout the tax year. You should track every reward receipt, date of receipt, and FMV on that date. Aggregating these values at the end of the year helps you determine the total ordinary income to report on your tax return.

Most investors use specialized crypto tax software to automate this process instead of tracking rewards manually. A tool like CoinTracker’s Portfolio Tracker can sync with your wallets and exchanges and automatically record reward events – then import that data into the relevant tax forms.

Which IRS forms should you use to report staking rewards?

The IRS expects different forms depending on how you earned the staking rewards and what you did with them afterward.

Tax reporting for individual crypto stakers

Most individual taxpayers who earn through exchanges or personal wallets report those crypto staking rewards as ordinary income.

Here are the forms you’ll need:

• IRS Form 1040 Schedule 1: Under “Digital assets received as ordinary income not reported elsewhere,” you’ll enter the total FMV of all staking rewards you received during the year.
• IRS Form 8949: If you sell, swap, or spend your staking rewards, you report each disposition on this form. You’ll use your cost basis and the proceeds to determine your gain or loss.
• Schedule D: You use this form to summarize the totals from Form 8949 and calculate your net capital gain or loss.

Tax reporting for staking as a trade or business

In some cases, staking activity can be treated as a trade or business. This could apply when you operate as a professional validator, earn staking rewards on a regular and ongoing basis, and have a clear profit motive.

If that’s you, here are the key forms:

• Schedule C: You'll report your rewards as gross receipts here, instead of on Schedule 1. This form also allows you to deduct business expenses, such as server hosting fees, electricity and hardware depreciation.
• Schedule SE: Business stakers are usually subject to self-employment tax. You should use this form to calculate the Social Security and Medicare taxes due on your net self-employment income.

Optimize your crypto tax strategy with CoinTracker

Crypto staking rewards are taxable when you receive them, and any later sale or use also triggers capital gains reporting. But it can be challenging to keep track of reward details across all your wallets and exchanges, then report them properly in line with the latest IRS rules.

Worried about reporting your crypto taxes? CoinTracker makes it simple. Join over three million users who trust us for hassle-free tax reporting. Start for free today.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

FAQ

When are staking rewards taxable?

Staking rewards are taxable when you receive them, and not taxable when they’re still locked in a staking protocol. Rewards become taxable events once you have the power to sell, swap, or transfer them.

Are staking rewards taxed as income or capital gains?

Staking rewards are taxed as ordinary income when you receive them. If you later dispose of the rewards, they’re subject to capital gains tax at that time.